From Shakespeare to The Secret, the idea that our thoughts and perceptions shape our reality is recognized as a powerful truth. As the Bard wrote, “[T]here is nothing either good or bad, but thinking makes it so.”

While charlatans have long used this belief to promote bogus cancer cures and get-rich-quick schemes, psychologists are now actually beginning to understand how “faking it ’til you make it” — or alternatively, psyching yourself out with negative thinking — works in the social world. Two fascinating recent studies — one on confidence; the other exploring social fears — reveal how our own positive and negative stances work to alter our relationships and careers.

The first study, published in the Journal of Personality and Social Psychology, explored the positive effects of overconfidence, showing that it enhances social status by presenting a false image of competence. If you’ve ever wondered how the utterly clueless rise to the top, or why managers often seem to make worse decisions than dart-throwing bonobos, this research provides some insight.

In a series of six experiments, researchers led by Cameron Anderson at the University of California, Berkeley, showed that when you think you’re better than you are at certain tasks, people tend to believe you. In groups, people are easily persuaded by others’ confidence, even if it’s unjustified.

The first study involved 76 undergrads, who worked on a geography task in pairs. Before starting the task, each student was given a blank map of the U.S., labeled only with rivers and lakes, and was asked to locate 15 specific cities. Then, they were asked to rate how well they thought they did on this test; a comparison between that perception and their actual performance was used to gauge their level of overconfidence. (Their actual performance wasn’t disclosed to them.)

Afterward, the participants collaborated on the same task with a partner. Once they finished, they privately rated their partner’s performance as well as whether they thought he or she had high social status. The status rating was based on whether the partner had led decisions, otherwise influenced them or was seen as worthy of admiration or respect.

The researchers found that ratings of both high status and high competence were linked with the person’s level of overconfidence. “In fact,” the authors write, “overconfidence actually had as strong a relationship with partner-rated competence as did actual ability.” In other words, people who think they are good at something are seen as being good at it, whether or not they actually are. (Even dogs demonstrate this effect: ever watch a chihuahua intimidate a much larger dog?) Unfortunately, even in the absence of actual ability, the illusion of strength and competence that people exude makes others see them as good potential leaders.

In a similar experiment involving 243 first-year MBA students, researchers replicated the results. They first measured each participant’s overconfidence at the start of the semester, this time by presenting students with a list of historical names, events, books and poems — some real and some made-up — and asking them to identify the ones they recognized; those who picked the most fake “foils” were classified as having the most overconfidence about their own knowledge.

Throughout the term, the students all worked in groups of five or six students — the same groups for seven weeks. Afterward, each student filled out an online survey rating the status of their group members. Again, overconfidence was linked with high ratings of leadership and status from others. People didn’t perceive overconfidence as arrogance; rather, they seemed to like overconfident types more.

The rest of the research expanded further on these findings, with experiments elucidating the types of social behaviors that make overconfident people seem so competent — speaking more often in groups and in more confident tones, for example, and working with others in a relaxed and comfortable way. “Overconfident individuals have a behavioral signature that, to observers, looks like actual competence,” the authors write.

Experiments also showed that people are driven to overconfidence because they’re seeking high social status. The authors conclude that although selecting leaders is one of the most important tasks for societies and groups, “we are often forced to rely on proxies for ability such as individuals’ confidence. In so doing, we as a society create incentives for those who would seek status to display more confidence than their actual ability merits.” That, of course, leaves us vulnerable to picking those who can best exhibit confidence, not competence.

The second study, published in Organizational Behavior and Human Decision Processes, looked at the flip side of confidence — paranoia — and how people’s negative perceptions of the world can become their own self-fulfilling prophecies. The authors, led by Jennifer Carson Marr of the London Business School in England, found that people’s fears about being viewed negatively by others actually influenced those views themselves.

The researchers examined what they called “motivation to acquire relationship-threatening information,” or MARTI. Having MARTI basically means being paranoid that other people are talking trash about you behind your back or are otherwise undermining your social status, and being driven to learn what they’re saying. Some of us take a “don’t ask, don’t tell” perspective when it comes to other people’s opinions of us; others want to reduce uncertainty about their social lives by finding out the bad news, now.

In one experiment, involving 93 people in their 20s, researchers found those who had high levels of MARTI were more likely to assume negative intent when presented with ambiguous scenarios. For example, if they heard laughter in the lunchroom and it stopped when they opened the door, those with high MARTI were more likely to assume the laughter was directed at them.

Another experiment, this one involving 506 adults taking an online survey, examined whether people with high levels of MARTI were more likely to engage in behaviors that monitor or test another person’s loyalty, such as eavesdropping on phone calls or reading private emails. Not surprisingly, those who wanted to find potentially relationship-threatening information were more likely to snoop.

Other experiments in the study looked at how others respond to people who focus on potential disloyalty and relationship threats. The consequences weren’t pretty: paranoid people tend to elicit increased anger and outright social rejection from others. As the authors put it, “Taken together, our results suggest that individuals high on MARTI may in some ways provoke the very harm they are trying to avoid.”

And so, while being overconfident won’t cure your cancer, nor will thinking negatively necessarily get you fired, being self-assured and deciding to believe that what other people think of you is none of your business will make your social and business life both more pleasant and more successful. Although, it would be kind of nice for the rest of us if you build your confidence on genuine competence, too.

Maia Szalavitz is a health writer at TIME.com. Find her on Twitter at @maiasz. You can also continue the discussion on TIME Healthland’s Facebook page and on Twitter at @TIMEHealthland.

It would be interesting to look at extremist militia groups regarding paranoia and self-fulfilling prophecies, especially in light of the current revival of interest in gun control issues. It seems to me that such groups who fear that the government (or UN stormtroopers) will come to take away their guns and so create groups that practice paramilitary training and hoard firearms are creating exactly the conditions that will draw the attention of law enforcement. The more radicalized their speech and practices become, the more likely it would be that government agencies would be informed and investigate or seek informants to monitor such groups. In their minds, this would seem to confirm their paranoid visions of a police state out to squash 2nd Ammendment rights and free speech

This was very interesting and actually has motivated me to make some personal changes in my own life. I fall into the MARTI category. Oddly enough, I haven't always been this way until recently (past few years), so with that being said, I will start taking the attitude of it's none of my business what other people think of me and maybe I will have a better quality of life from the non negative thoughts..thanks for the article.

I think overconfident people are annoying and possibly had a bad childhood. Paranoid people i think have possibly been told sometime in there life what they have done isnt good enough and not praised enough.

How you think greatly impacts how you feel and the behaviors/actions you take. Also, imagination is powerful and our minds can easily make up paranoia scenarios or we can direct our attention to more positive and optimistic expectations.